A clear indication of how quickly the Middle East is embracing plastic money, the region’s retail sector saw cash payments drop to 20% last year from 70% in 2017, according to a recent report from Statista.com.
On the other hand, credit card payments increased from 16% in 2017 to 38% in 2021, showing the emerging new trend in the retail landscape – Buy Now, Pay Later (BNPL) – a new power of purchase.
“The global retail environment is changing. On the contrary, technology-driven innovation is catalyzing massive growth and many firsts – the first phygital store in the region, the launch of the first ‘metaverse as a service’ business and much more,” said Justina Eitzinger, COO of Images Group Middle East.
The size of the GCC retail sector is expected to reach $308 billion in 2023 at a compound annual growth rate (CAGR) of 4%, from $253.2 billion in 2018. Retail sales are expected to rebound and grow by 2023, driven by population increases and international tourist arrivals.
The online retail industry in the region has already grown rapidly over the past couple of years. The value of e-commerce transactions is expected to reach approximately $27 billion by 2022 in the United Arab Emirates. The country ranks first in the Middle East and North Africa (MENA) region in UNCTAD’s e-commerce index, followed by Saudi Arabia.
According to CNNB Solutions, Mena e-commerce sales will reach $50 billion in 2022. Ninety-one percent of Mena customers have become digital converts and will continue to shop online, with 73% more purchases in online since the pandemic. Mena shoppers are looking for safe and secure online payments – over 60% of people believe secure payment is fundamental to a good online shopping experience.
At the same time, people and goals are prime focus areas for businesses, Eitzinger said. “As new jobs are created and some roles become redundant, retailers are investing in their people and purpose. Sustainability and DEI (diversity, equity, inclusion) are key areas and have become more important than ever. brands are on a new growth trajectory and it will be amazing to see those stories unfold at MRF this year,” she said.
According to Euromonitor International’s Voice of the Consumer: Lifestyle Survey, 2021, more than 50% of consumers in the Middle East prefer to spend money on experiences rather than things, compared to 44% globally. Additionally, 65% of consumers are looking for curated experiences, far more than 58% of consumers globally.
The survey also revealed that people prefer to engage more on a personal level, whether through social media or speaking directly with customer service assistants. For example, 65% of people in the Middle East would rather talk to a human than a chat bot, compared to 58% globally. Therefore, as retailers in the region strategize, digital technology must combine with customer engagement, an engagement that still believes in a “real” and “human” experience, experts say.
In the Middle East, physical retail remains stronger than in other regions, although e-commerce is growing, according to a report from Euromonitor. In 2020, the region’s e-commerce penetration rate increased to 8% from 4% in the pre-pandemic period. Thus, while e-commerce has experienced strong growth, physical in-store sales dominate the commercial landscape of the region. Local consumers are expected to spend an average of over $2,400 in physical stores in 2025, up from nearly $2,000 in 2020, compared to just $295 online the same year.
Over 300 retail industry experts from 120 participating companies, including 80 keynote speakers, will discuss these challenges and opportunities highlighted by the new retail revolution driven by digitalization across the industry during the Middle East Retail Forum (MRF), to be held in Dubai on November 15. The MRF conference concludes with the annual Images RetailME Awards which recognize the top performing retailers in different categories.
“MRF and the RetailME Awards have become the industry’s premier convention and annual awards that everyone in the retail industry relates to and is proud to attend. It has become a matter of pride not only for retailers, but has firmly repositioned the region on the global retail map,” Eitzinger said.
Middle East Retail Forum is supported by Mastercard, Zebra Technologies, Adyen, Altavant, Kalandoor, Line Investments, Al Bayader, BinDawood Group, Rasasi, ENOC, XENO, Red Sea Mall, Board International, EZ Dubai, Tap and Jiffy, among others.
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